Rajen Shah of Angel Broking said Infosys’ numbers would be very much in line with its guidance. "The new guidance for FY09 could probably be lower than what the market estimates because they will factor in maybe a rupee appreciation. In order to control inflation, we could probably see the government letting the rupee appreciate."

A: No surprises. The numbers would be very much in line with guidance. The new guidance for FY09 could probably be lower than what the market estimates because they will factor in maybe a rupee appreciation. In order to control inflation, we could probably see the government letting the rupee appreciate. We need to be see how the new guidance comes out.

Q: A quick word on some of the infrastructure names. We have seen a come back in stocks like Punj Lloyd, Neyvile Lignite, and some of the power stocks in the last few days. Do you think the worst is over there?

A: The market is refusing to go down inspite of having two negative articles this week. One, the US sub-prime loss is being pegged at USD 1 trillion by IMF and George Soros. Second, we had inflation numbers which were very disappointing. Despite that, the market is holding on to gains and refusing to go down.

That gives me a feeling that probably the guidance from Infosys and other top-notch companies will turn out to be reasonably good. The market would move up and that is again a trigger sort of movement for all stocks from the infrastructure and power space. That makes me feel that maybe we could see some sort of rally which could take the markets to about 16,500 or 17,000 kind of levels. Because of that, we are seeing movement in power and infrastructure companies.

Q: Within the capital goods space, we have seen some numbers come out like BHEL, L&T, and Siemens etc, how would you play the sector?

A: Despite all stocks coming down 30-40% from their highs, valuations are a bit on higher side. The companies are quoting between 25-30 kind of PE multiples. Growth is going to be there, but valuations are still a little on the higher side. The markets are refusing to go down, digesting the bad news, and looking for good news to move up. Probably, we could see some rally in stocks maybe about 5-10% from current levels.

Disclosure:

It is safe to assume that my clients and I may have an interest in the stocks/sectors discussed.